Investors rush to Clearwire

Clearwire, the Kirkland company led by wireless entrepreneur Craig McCaw, has raised $260 million through a debt offering, with the possibility the total could soar to $520 million or more.

The eye-popping offering — larger than many recent initial public offerings of stock — was detailed in documents filed with the Securities and Exchange Commission (SEC) that became available yesterday.

The size of the offering could increase to more than $520 million, because the 31 unnamed investors who bought the notes have the option to purchase "an equivalent amount" of notes to double their investment, the document said.

In addition, the investors can buy shares at a later date through warrants.

Clearwire provides wireless broadband Internet access in 16 U.S. cities and dozens of other cities around the world. The technology is an early version of WiMax, which promises to deliver wireless high-speed Internet access.

It can cover great distances and closely mirrors third-generation high-speed networks being launched by cellular providers today.

To date, the company has raised more than $300 million, according to SEC documents and company announcements. However, the total is likely larger.

"What we have publicly filed would not accurately piece together our capital history," said Ben Wolff, Clearwire's executive vice president and secretary. "We prefer to not comment on how much capital we have raised in total."

Clearwire has disclosed only two of its investors. In March, it said it was partnering with Bell Canada to provide voice calls over its network.

As part of the deal, Bell Canada invested $100 million. Before that deal, Clearwire said it received an unspecified amount from Intel.

Clearwire did not disclose how it would spend the recently raised money, but WiMax is a capital-intensive business that requires acquiring spectrum, or airwaves, and building out networks.

The 500-employee company also must support NextNet, its equipment subsidiary in Minneapolis.

Clearwire's McCaw founded McCaw Cellular Communications, which was sold to AT&T and later became AT&T Wireless.

Clearwire is considered one of the most promising forces in WiMax, given McCaw's experience with spectrum, the heart of the cellphone industry.

After selling McCaw Cellular, McCaw went on to start other projects, like Teledesic, which was well-funded but unsuccessful in its attempt to deploy Internet service through low-orbiting satellites.

Russell Daggatt, who spent more than seven years working with McCaw, including serving as president and vice chairman of Teledesic, said there are two main players positioned to take advantage of the early-stage WiMax market: Clearwire and the newly formed Sprint Nextel.

Daggatt, who is now an angel investor and has no stake in Clearwire, said both of the two companies have acquired a lot of the spectrum needed to deploy their service.

"I think Clearwire is doing everything right, although it's a long, hard slog," he said. "This is not easy money."